55.The purpose of these draft Regulations is to a establish a new UK-wide Clean Heat Market Mechanism (CHMM) to promote the development of the market for retrofit installations of heat pumps in existing buildings. The CHMM is to launch on 1 April 2025 and run for an initial period of four years. Under the scheme, manufacturers of heating appliances which have sales above specified thresholds will have to meet an annual target of selling heat pumps equivalent to 6% of their annual sales of fossil fuel boilers, while manufacturers of heat pumps will be able to earn a certificate for the installation of every heat pump in a scheme year. These certificates will be tradable, so that manufacturers of fossil fuel boilers can acquire them to help them meet their 6% target. Manufacturers which fail to meet their target and do not surrender the correct number of heat pump certificates will have to pay £500 per missing certificate. Any increases in the target in future scheme years will require further secondary legislation.
56.According to the Department for Energy Security and Net Zero (DESNZ), the current market for heat pumps is comparatively small: around 40,500 heat pumps were installed in existing buildings in 2023, in comparison to around 1.49 million fossil fuel boilers. The DESNZ says that the scheme aims to provide businesses with the certainty to invest in developing the heat pump market, growing the supply chain and promoting the uptake of heat pumps by consumers. The CHMM will work alongside a range of other policies, such as grant funding for heat pump installations. The DESNZ expects the scheme to help ensure the installation of at least 77,000 heat pumps a year in existing homes between 2024/25 and 2028/29. We consider this, from a starting point of around 40,500 installations per year, to be ambitious.